Georgia, Maryland and Texas Regulatory and Texas Judicial Update

Georgia, Maryland and Texas Regulatory and Texas Judicial Update

The Georgia Department of Banking and Finance recently amended its rules under the Georgia Residential Mortgage Act (the “Act”), effective October 8, 2012.  The Maryland Department of Labor, Licensing, and Regulation (the “Maryland Department”) recently amended and re-enacted emergency regulations governing the foreclosure process, effective October 1, 2012.  The Texas Department of Savings and Mortgage Lending (“Texas Department”) published a fee schedule effective November 1, 2012.  A recent case in Texas involving MERS was decided September 21, 2012.

GEORGIA RULES

 

 

Any licensee or registrant under the Act who fails to timely file a call report as required through the Nationwide Mortgage Licensing System and Registry will be subject to a $100 fine per occurrence (previously $1,000).

 

 

The following provision has been deleted: All mortgage loan originators who are required to be licensed and maintain their own surety bond coverage must keep copies of their bonds and also provide copies to their sponsoring/employing mortgage brokers or mortgage lenders.

MARYLAND RULES 09.03.12.01 TO .12

 

Foreclosure mediation is divided into prefile and postfile foreclosure mediation.

The following forms are available at the Maryland Department’s website at http://www.dllr.state.md.us/finance/finregforms.shtml#foremed:

  • A notice of intent to foreclose from a secured party offering prefile mediation, which must be accompanied in the same envelope or package by the packets of documents and forms substantially similar to the prefile mediation packet and loss mitigation packet;

·        The notice of filing with respect to borrowers who have participated in prefile mediation, which must be used to comply with the notice of filing requirement when accompanying an order to docket or complaint to foreclose for owner-occupied residential property with respect to which the borrower has participated in prefile mediation that has not resulted in a prefile mediation agreement;

·        The notice of filing with respect to borrowers who have participated in prefile mediation and have reached an agreement, which must be used to comply with the notice of filing requirement when accompanying an order to docket or complaint to foreclose for owner-occupied residential property with respect to which the borrower has participated in prefile mediation that has resulted in a prefile mediation agreement; and

·        The notice of filing for non-owner-occupied properties, which must be used to comply with the notice of filing requirement when accompanying an order to docket or complaint to foreclose with respect to a property that is not an owner-occupied residential property.

A form substantially similar to the respective form above is required to be provided to the borrower.

A borrower who elects to accept a secured party’s offer to participate in prefile mediation must send to the secured party or the identified representative of the secured party the completed and signed application for prefile mediation within 25 days after the date on which the notice of intent to foreclose was mailed by the secured party.  The instructions for the prefile mediation application must include a telephone number to confirm receipt by the secured party or the secured party’s representative of the application.

Within five business days after the date on which the secured party or the identified representative of the secured party receives an application for prefile mediation from a borrower, the secured party or the representative of the secured party must notify the Office of Administrative Hearings (the “Office”) that the borrower has submitted an application for prefile mediation.  The notification must be in a form substantially similar to the borrower information worksheet and instructions available on the Department’s website.

The obligation of the Office to schedule a mediation session arises upon the receipt of notice from the secured party that the borrower has submitted an application for prefile mediation.  The Office must conduct the mediation session within 60 days after the receipt of the notice that the borrower has submitted an application for prefile mediation from the secured party, unless a postponement is granted.

The total fee for prefile mediation is $350.  In accordance with instructions from the Department of Housing and Community Development, the secured party must pay the full amount of the $350 prefile mediation fee to the Housing Counseling and Foreclosure Mediation Fund.  The secured party may elect to pay the prefile mediation fee on behalf of the homeowner or collect all or any portion of the $350 fee as part of the resolution of the mortgage loan through prefile mediation or foreclosure, as applicable.

Each mediation agreement resulting from prefile mediation must include the following statements in 14 point, bold type:

·        [Name of borrower] is not entitled to postfile mediation unless otherwise agreed in this agreement; and

·        [Name of borrower] may call [Insert name and address of designee] to report a change of financial circumstances that could affect [name of borrower’s] ability to carry out the terms of this agreement.

 

Texas Department of Savings and Mortgage Lending Fee Schedule

 

The Texas Department of Savings and Mortgage Lending (the “Texas Department”) recently issued its Fee Schedule for mortgage banker registration, mortgage company licensing, independent contractor loan processor and underwriter company license, mortgage loan servicer registration, and Nationwide Mortgage Licensing System processing, testing, and background history fees that are effective from November 1, 2012 through October 13, 2013.  The Fee Schedule may be found on the Texas Department’s website athttp://www.sml.texas.gov/ResidentialMortgageLoanOriginator/rmlo_mb_forms.html?zoom_highlight=fee+schedule.

Bridges v. Chase. U.S. District Court of the Western District of Texas

 

 

A borrower signed a note and deed of trust with Temple Inland Mortgage Company.  The borrower’s mortgage was assigned by the lender to MERS, which transferred the deed of trust and other interests to Chase.  After financial difficulty, the borrower applied for a loan modification with Chase.  Chase notified the borrower that she was not eligible for a permanent loan modification and began the foreclosure process.

 

 

The borrower alleged that the assignment and transfer were void because they were fraudulently executed without proper authorization by the lender.  According to the borrower, MERS could not convey any interest in a promissory note because it does not hold promissory notes and does not handle mortgage servicing.  The borrower sued for fraudulent foreclosure and for the violation of a Texas statute prohibiting the filing of fraudulent lien claims against real property.

 

 

The Court held that foreclosure enforces the deed of trust, not the underlying note. Thus, a mortgage servicer is not required to possess the original promissory note as a prerequisite to foreclosure.  Further, a borrower lacks standing to challenge the validity of the assignments of the note and deed of trust if he or she is not a party to the assignments.  As to the statutory fraud in real estate claim, the Texas statute regarding fraud in a transaction involving real estate by its own terms only applies to fraud in real estate, not a loan transaction, even if it is secured by land.  With regard to the fraudulent lien claim, the allegation of a recording of an improper assignment of a deed of trust does not state a claim under the Texas fraudulent lien statute because an improper assignment of a deed of trust is not a lien as defined by the statute.